The rise of crypto has brought with it a new wave of cybercrimes, challenging the conventional methods employed by law enforcement agencies. With blockchain transactions inherently designed to provide anonymity, authorities have often found themselves at an impasse when tracing illicit crypto activities.

However, a recent development in Canada has shown a breakthrough in this standoff, illustrating a potential model for global law enforcement. Particularly, Canadian police have incorporated advanced technology into their investigative procedures, enabling them to delve deeper into the blockchain realm.

Through specialized software, they can now trace blockchain transactions to their source, identify perpetrators, and pinpoint the exact destination of funds.

Chainalysis Reactor: A New Tool In The Fight Against Cybercrime

Canadian police forces have started to employ Chainalysis Reactor, a software that offers capabilities well beyond traditional investigative tools. According to a report from the Lethbridge Herald newspaper, the software facilitates the tracking of digital currencies from their initiation point to their eventual deposit on a digital exchange.

Related Reading: Canada Exposes Crypto Sites Creating Fake Dispute Resolution Organizations

When the trail leads to a particular exchange, police can then obtain the account holder’s details and the subsequent transaction data. This, in essence, means that criminals can no longer find solace in the previously impenetrable blockchain.

Previously, Canadian agencies faced significant challenges with cases involving digital assets. An officer, trained specifically in blockchain analysis, highlighted the profound transformation that Chainalysis Reactor has brought about.

He recalled how, in earlier times, their investigations would frequently hit a dead end upon discovering fraud with digital currencies. But that has changed.

Canada’s Growing Relationship With Chainalysis

The collaboration between Chainalysis and the Calgary Police Service dates back to April 2023 when the Western Canada Cryptocurrency Investigations Centre was inaugurated. This center was established with a specific focus on delving into crimes associated with blockchain technology.

Canada’s evolving relationship with cryptocurrencies is also evident from its positioning in Chainalysis’ Global Crypto Adoption Index. The country has progressively climbed the ranks, being placed 22nd in 2022, an improvement from 26th in 2021 and 24th in 2020.

Due to this rise, the latest data from Chainalysis showed that for every 1,000 Canadians, there was an exposure of at least $1,144 CAD to illicit crypto activities.

In June, the Canadian Securities Administrators (CSA), which consists of provincial and territorial securities regulators in Canada, issued a warning to investors regarding crypto companies that falsely claim to be authorized by non-existent regulatory or dispute-resolution organizations.

The introduction of specialized blockchain investigation tools like Chainalysis Reactor demonstrates a significant leap in the ongoing battle against crypto-related crimes. With Canada leading the way, other nations might soon adopt similar methods, creating a global, united front against cyber criminals.

Featured image from Unsplash, Chart from TradingView

MakerDAO has been in the headlines recently following a boost in the maximum Dai Savings Rate (DSR) from 3.19% to 8% on Sunday, August 6. This temporary increment termed the Enhanced Dai Savings Rate (EDSR), was designed to encourage more Dai (Maker’s stablecoin) holders to deposit their tokens on the Maker protocol and earn interest.

Following the implementation of EDSR, the Dai token has experienced some traction, with its market cap rising by over $570 million since Sunday, according to data from CoinMarketCap. 

In addition, data from the Makerburn dashboard shows the number of DAI in the DSR program has surged, moving 396.8 million on August 6 to its current value of 906.7 million. 

However, amidst the massive success of the EDSR, MakerDAO co-founder Christen Rune has proposed to adjust this incentive plan “based on observed data.” 

MakerDAO Co-Founder Proposes EDSR Optimization Plan To Curb ETH Whale Dominance 

On August 8, Rune submitted a governance proposal on the MakerDAO forum to optimize the Enhanced Dai Savings Rate citing an ongoing ETH whale dominance over regular Dai holders in terms of the program’s benefits. 

Related Reading: Maker (MKR) Signals Bullish Price Formation – Is $1.300 Around The Corner?

According to Rune, offering yields on Dai that are higher than the cost of borrowing Dai has led to certain borrowing activity known as “borrow arbitrage,” whereby traders borrow Dai at 3.19% and deposit in the EDSR program for 8% profit.

Rune noted that this was not the intended purpose of the EDSR plan. He stated that this investment strategy was mainly practiced by ETH and staked ETH whales, who now receive a higher yield at the expense of regular Dai holders,  the primary target of the EDSR program.

To counter this unforeseen circumstance, Christen Rune proposed to reduce the maximum EDSR interest rate from 8% to 5%. Furthermore, the MakerDAO cofounder proposes an increment in the DAI borrowing rate to be equivalent to the EDSR rate at a minimum of 5%, thus halting the ongoing large-scale “borrow arbitrage” activities.

The proposal also states that MakerDAO should extend Tier 1 EDSR to cover a utilization range of 0-40% and introduce a Tier 2 EDSR for utilization between 40-55% with the aim of making the EDSR plan sustainable. 

For context, utilization refers to the portion of the total capacity of the EDSR system that is in use. Currently, data from Makerburn states that the EDSR has an 18% utilization rate. 

Originally, the EDSR maximum yield was meant to drop to 5.8% once utilization surged to 20%, albeit that would not occur upon approval of Rune’s latest proposal. 

Maker (MKR) Maintains Bearish Form Amidst ESDR Success

In other news, MKR, the native token of the MakerDAO lending protocol, has seen its market price fall in recent days despite the massive boost in DAI’s market shares. 

According to data from CoinMarketCap, MKR’s price is down by 0.84% in the last 24 hours. This price drop adds to the token’s prolonged bearish state, whereby it has lost over 8.26% of its market value in the last seven days. 

Related Reading: Record-Breaking $10 Billion Open Interest Fuels Bullish Speculation For Bitcoin Reversal

During this period, MKR’s price declined from $1,339.22 on Aug.3 to as low as $1,187.66 on Aug.7. However, most MKR investors still likely retain faith in the DeFi token, which boasts of a positive monthly performance gaining by 32.30% in the last 30 days.

At the time of writing, MKR is trading at $1,214.28, with a 0.39% loss in the last hour. With a market cap of $1.18 billion, the token is ranked as the 42nd largest cryptocurrency in the market.